Long-Airdox gets jump on major rival: Menzies - Part 1

Staff Reporter

A decade of upheaval in the world’s longwall equipment manufacturing industry has seen America’s Long-Airdox emerge a winner.

With a lengthy restructuring process completed and two strategic acquisitions tucked away this year, major longwall equipment manufacturer Long-Airdox is looking ahead to a period of aggressive growth and expansion. Company president Ian Menzies, recently in Sydney, spoke exclusively to Australia’s Longwalls about the company’s future plans.

High on the agenda will be further acquisitions, aimed at growing and developing the company in significant niche markets and strategic geographic regions. The strategy is simply to increase market share by taking it away from others, Menzies said.

Most recently, Long-Airdox wrapped up the purchase of Ohio-based Jeffrey Mining Products, attractive largely because of the company’s Australian market position where it is best known for its established range of continuous miners and diesel ram cars.

“We see Jeffrey as being a company that has a fairly good reputation but customers felt nervous purchasing new products from Jeffrey because there was concern about whether the company would still be there in the longer term,” Menzies said. “Jeffery also has a fairly healthy after-market business, but the ability to sell new equipment was declining. In fact that was a picture that was replicated in both the UK and in the USA.

“Customer references have backed up (the perception) that Jeffrey being acquired by Long-Airdox, which has a long-term strategy and plan for the future, means Jeffrey is going to be around. What is not commonly known is that, aside from the USA, Long-Airdox represented Fletcher roof bolters throughout world, except in Australia and New Zealand, (where Fletcher was represented by Jeffrey) so the Jeffrey acquisition brings us full circle,” Menzies said.

In the USA Long-Airdox has developed the CM210 continuous miner for mid-seam applications while in Australia there are 14 operating Jeffrey continuous miners. Long-Airdox will now review the continuous miner range to incorporate the best qualities of the Long-Airdox machine and the established Jeffrey continuous miner range.

Growth through acquisition is no new strategy for Long-Airdox parent The Marmon Group. Major acquisitions during the 1990s brought under the Long-Airdox banner such companies as Simmons-Rand Company, Becorit Mining Division and Scotland’s Anderson Group, and served to transform what was essentially a US domestic supplier into a multi-national mining equipment group with global penetration. The purchase of Anderson in 1995 heralded a period of consolidation and reconstruction, resulting in the eventual closure of the manufacturing facility with a 100 year-old tradition based in Motherwell, Scotland. The group’s headquarters were relocated from Oak Hill West Virginia to Blacksburg, Virginia, USA. Menzies, managing director of Anderson in 1995, has been Long-Airdox president since 1997, and has overseen much of the group’s recent reorganisation. Not only does Menzies believe the process is now bearing fruit for Long-Airdox, he also predicts that competitors who have not been as responsive to hard times will struggle going forward.

The financial crisis that hit major competitor Joy parent Harnischfeger Industries Inc in early June had long been anticipated by Long-Airdox, according to Menzies. Second quarter results, which saw Harnischfeger post a six-month loss of $US90.7 million, completely decimated the value of the company’s already depressed stock, relegating it to virtual junk bond status. It subsequently filed for Chapter 11-bankruptcy protection in the USA, effectively giving it some breathing space to restructure.

Harnischfeger will now undergo the difficult process of taking a long hard look at itself and reorganising accordingly, a process Long-Airdox finalised last year.

“You’ve got to think that customers will be very concerned and look at the options open to them, one of which is certainly Long-Airdox,” Menzies said. “Any company would want to capitalise on anything that happens within the industry. Our big advantage is that we’re privately owned. Marmon is in an extremely strong position financially.”

Earlier this year a leaner and meaner Long-Airdox signalled a return to the acquisition trail by securing North American Inc, a conveying and tunnelling specialist. Long-Airdox has tucked its own conveying and tunnelling division, including product development and R&D, under the wing of North American, strengthening the group’s market position in the Asia-Pacific and particularly in China.

“In Australia Long-Airdox has been fairly strong in overland conveying, batch-weigh train load-outs and modular coal preparation plants which we’ve now taken to China, but it was regionalised and specific,” Menzies said. “We’ve concentrated on, become much more deliberate, about our conveying and tunnelling strategy. North American is a very nice company and the president of that company, Joe Johnson, is heading up the Long-Airdox conveying business. We will retain the name North American and use it as a marketing tool.”

Another potential advantage of the North American purchase will be the opportunity to offer mineral producers, not traditionally serviced by Long-Airdox, a new range of conveying equipment from a wider base than before.

“A lot of conveyors in the non-coal side carry other minerals such as potash and copper,” Menzies said.

Prising open non-coal markets, particularly in emerging regions, is high on the Long-Airdox strategy list and will help cushion the company from the vagaries of the coal price. This strategy has been helped by the decentralisation of Long-Airdox’s manufacturing divisions, liberating the company from the large manufacturing plants of the past, “which tended to dictate what the manufacturing strategy had to be”. According to Menzies, any of the group’s manufacturing arms can today produce virtually any part of the product range, given enough lead time. Gone are the days when equipment was produced as a single item at a factory and shipped out whole. Equipment is now sent in a modular form and is usually assembled in the country of destination.

“At the factory in Scotland, which had a long history of producing longwall shearers, there was a lot of fear about whether the product could be manufactured elsewhere. It’s actually going tremendously well. From a management point of view it has given us incredible flexibility. We now concentrate on our ability to purchase product and global sourcing of primary components is something we continually pursue.”

Most read Archive

topics

loader

Most read Archive